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Russia: Brevnov Survives As Chief Executive Of Unified Power Systems

  • Stephanie Baker



Moscow, 29 January 1998 (RFE/RL) -- Reflecting the waning power of reformers in the Russian government, Boris Brevnov, the young chief executive appointed to clean up Russia's giant power company Unified Energy Systems, has narrowly survived a boardroom coup attempt.

Seven out of 15 board members voted to remove Brevnov at a surprise board meeting called late Tuesday by Anatoly Dyakov, the former Soviet-era director of UES. But board members representing the government, which has a controlling stake in the company, did not back the move.

First Deputy Prime Minister Boris Nemtsov, who brought 29-year-old Brevnov into UES last year, called the attempted ouster "illegal" and said Dyakov would not go unpunished. Nemtsov told Russian television he had spoken with Prime Minister Viktor Chernomyrdin Wednesday and both fully backed Brevnov.

But Chernomyrdin's spokesman, Igor Shabdurasulov, was more cautious, saying the board's vote should be considered only a "recommendation." He said the decision to appoint or remove Brevnov "remains in government hands."

Cabinet reformers, led by Nemtsov and fellow First Deputy Prime Minister Anatoly Chubais, have been sidelined by Chernomyrdin in recent weeks. In a cabinet reorganization earlier this month, Chernomyrdin took control of the fuel and energy ministry away from Nemtsov, forcing Brevnov to report directly to the prime minister.

UES, Russia's largest company by sales and a benchmark on the country's stock market, has been a target of government reforms aimed at streamlining Soviet-era monopolies.

Brevnov took over as chief executive officer at UES in May, pushing Dyakov into the more ceremonial post of chairman of the board of directors. Sources close to UES say the two have consistently clashed over plans to reform the company and that Dyakov has been trying to remove Brevnov ever since he was brought in.

Brevnov said on Russian television Wednesday evening: "This is not a scandal. It is a conflict between two different systems of management."

Brevnov's spokesman, Sergei Medvedev, called the board's vote a "palace coup" and said preparations were underway to hold an extraordinary shareholders meeting of UES to force Dyakov to stand for re-election.

Medvedev, President Boris Yeltsin's former press secretary, dismissed speculation that Chernomyrdin supported the attempt to oust Brevnov. In his words: "The prime minister completely supports the current CEO." He added that top managers at UES fully backed Brevnov at a meeting on Wednesday.

The attack on Brevnov comes after Russian media reports accused him of corruption. The Account Chamber, a government watch-dog group linked to the State Duma, launched an investigation last month into the financial activities of UES and Brevnov. In particular, auditors have objected to Brevnov's high salary and questioned whether he misused company funds during his move from Nizhny Novgorod to Moscow.

Dyakov accused Brevnov Wednesday of "abuse of office," saying he had used a company plane for a personal trip and had taken out loans for UES without the approval of the board of directors.

Brevnov said the charges were groundless. His spokesman, Medvedev, countered with his own charges, saying he expected the tax police to hand over evidence proving that Dyakov was guilty of financial wrongdoing. Several observers speculated that the corruption charges, coupled with Nemtsov's weakened position, had prompted Dyakov to strike.

Dyakov, however, called the board's vote a "spontaneous decision" and said he never intended to remove Brevnov. He added that eight board members were present at the meeting, giving the vote the necessary quorum.

Tuesday's board meeting followed a session of the government's commission overseeing UES, which gave Brevnov a month to draw up a plan to increase the company's efficiency.

Sources close to UES say Brevnov has a prepared plan to restructure UES and eliminate inefficiencies, but a lack of consensus within the government has prevented bold steps from being taken.

Investors have praised reforms under Brevnov, who has moved to clean up the company's messy finances and increase competition in the energy sector. Brevnov has said UES' profitability jumped 30 percent in 1997, while cash payments have increased.

UES has also reduced tariffs for industrial users, considered essential to help enterprises boost competitiveness.

Brevnov's position remains precarious as long as Dyakov remains chairman of the board of directors. But several observers said Brevnov's hand could be strengthened if the government agrees to remove Dyakov, clearing the old guard out of the company's top management.
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